Outsourced debt collection: what it is and how it works

Outsourcing debt collection is becoming an increasingly common practice among companies, so they can access a range of practical and economic advantages. Firms, which need to recover money from their customers, often do not have the necessary skills or the internal structure to carry out particularly technical operations. Alternatively, much more simply, they don't want to get involved in lengthy lawsuits and waste time carrying out an action that is not part of their "core business".

We Are Fiber offers various outsourced front office services and an excellent credit management and recovery system, to relieve the internal resources of the company from secondary tasks. 

How much does credit recovery cost a company?

Businesses that decide to undertake debt collection on their own face rather high expenses. It is estimated that companies use debt collection for over 55% of their turnover each year.

It must be considered that the cost of internal human resources, intended for the management of unpaid invoices, weighs more than 5% of the operating costs for Italian companies. Unpaid credit causes economic damage not only in terms of non-collection, but also for all financial charges deriving from the internal administrative management of credit recovery activities.

Outsourcing debt collection: when to outsource

Outsourcing debt collection is suitable for those businesses that have to follow various activities that are difficult to manage internally. Regardless of the size of the company, it is an operation that significantly reduces costs and improves internal productivity. In the context of credit management, not only should the recovery phase be considered, but also the process of the active cycle of working capital. The BPO (business process outsourcing) of credit management therefore becomes an excellent strategic solution and guarantees the following advantages, which we analyze below:

• cut to fixed costs;
• possibility of using specialized skills and methodologies;
• leaner and faster procedures for debt collection by way of outsourcing;
• customization of credit recovery systems.

Debt collection outsourced: a nice cut to fixed costs

The outsourcing of debt collection primarily brings economic benefits. Fixed costs become variable, reducing the costs for the company and the workload for internal resources.

Internal credit management imposes fixed costs on a company, such as the creation of an ad hoc sector that must be adequately trained and prepared. Furthermore, these costs are also incurred in periods during which they are not necessary.

With the outsourcing of the service, on the other hand, costs are linked exclusively to the result obtained and have a limited period of time. 

Skills and specialized tools

A company specialized in credit recovery, such as We Are Fiber, is capable of managing and recovering credits with specialized skills and a “know how” built up over time. The service offered is more effective and punctual than a company that has never operated in this sector and lacks the essential skills required. We at We Are Fiber not only have experience in debt collection, but we are able to make the action more targeted according to the customer’s needs.

We provide the partner company with tools and methodologies that are consolidated and tested, increasing its own level of skills. Investing in the outsourcing of debt collection means optimizing and improving the company's assets.

Lighter and faster procedures

Relying on an outsourced credit recovery center allows you to improve some internal company procedures, starting a positive cycle. Due to in-depth knowledge in the field, We Are Fiber provides you with expert consultants who can identify internal issues and improve the preliminary management of the active cycle.

Why was there a delay in payment? Do we need to improve communication? How and where should we intervene to speed up the credit recovery process? Our consultants are able to answer these questions and many others, starting a general improvement process of all internal procedures, which become leaner and faster. In this way, costs are significantly reduced and the entire internal work process of the company is optimized.

Custom credit recovery

Credit recovery is a rather delicate and, in some ways, even thorny operation. For a company, it becomes somewhat embarrassing to recover credits in a "forced" way, with the risk of ruining the commercial relationship with customers.

The client company, relying on an external credit recovery service, is not directly involved, which is a huge benefit. We at We Are Fiber, in agreement with the company, draws up the most appropriate customized credit strategies to safeguard the business relationship.

If you want an outsourced debt collection service to focus more on your "core business", contact us at We Are Fiber to craft the strategy that best suits your needs.